More than half of the members of the now-defunct National Health Insurance Fund (NHIF) failed to pay their monthly contributions, new disclosures show, increasing the financial burden on public medical insurance and raising concerns about its sustainability.
According to an NHIF Board Exit Report dated November 2024, out of 16.2 million registered members, only 7.1 million were actively contributing.
This means that about 56 percent of enrolled members were inactive, resulting in a discrepancy of more than 9.1 million members. This figure represents an increase of 300,000 from the previous year’s figure of 8.8 million dormant members.
During the period under review, the NHIF processed 8.5 million claims, highlighting the high demand for healthcare services among its members.
These claims included hospital admissions, outpatient visits, specialised treatment, and maternity services. The increase in claims suggests that more Kenyans relied on the NHIF for essential medical care, despite ongoing problems with contribution compliance.
“During the period under review, 8,464,880 claims were processed for a total of Sh57.8 billion, while capitation payments amounted to Sh7.3 billion. As of 30 June 2023, the total active membership stood at 7.1 million members from formal, informal, and sponsored programmes, representing 44 percent of the total enrolled membership of 16.2 million,” said the report.
In addition, total benefits paid by the NHIF during the period reached Sh70.9 billion against total contributions and premiums of Sh81.6 billion. This resulted in a loss ratio of 87 percent—meaning that for every Sh100 collected in premiums, Sh87 was spent on claims and expenses.
This claims ratio increased from 83 percent in the previous year, indicating a growing utilisation of healthcare services by beneficiaries.
Factors contributing to the rising claims burden included the rising cost of medical services, more frequent hospital visits, and the expansion of healthcare benefits. As of December 2023, the government owed NHIF Sh30 billion in unpaid premiums, while healthcare providers were awaiting Sh25.4 billion in reimbursements.
“Total benefits paid as of June 30, 2023, amounted to Sh70.1 billion against contributions and premiums of Sh81.6 billion, resulting in a loss ratio of 87 percent,” the report added.
Despite these challenges, NHIF showed financial growth in the 2022-2023 financial year, with revenue increasing from Sh78.16 billion in the 2021-2022 financial year to Sh81.60 billion in the 2022-2023 financial year.
This reflects steady growth in contributions and premiums.
Total settled claims increased from Sh58.67 billion over the same period, highlighting the growing demand for healthcare services, while total membership increased from 15.46 million to 16.21 million.
In response to these challenges, the Kenyan government introduced the Social Health Insurance Act in November 2023, which led to the establishment of the Social Health Authority (SHA) to replace the NHIF.
The SHA aims to provide affordable and accessible healthcare to all Kenyans as part of the government's Universal Health Coverage (UHC) plan.
Since its launch on October 1, 2024, the SHA has seen significant membership growth. According to the Ministry of Health, more than 17.8 million Kenyans had enrolled as of February, including 13.2 million new members and 4.6 million people who transferred from NHIF.
A major change under the SHA is the new contribution model, which aims to improve fairness and financial sustainability.
Previously, under NHIF, employees contributed a fixed amount of between Sh150 and Sh1,700 per month based on their income, while the self-employed paid a flat rate of Sh500.
SHA has replaced this model with a 2.75 percent deduction on gross income, with a minimum monthly contribution of Sh300.
